Ivanhoe Clinic is considering investing in new heart-monitoring equipment. It has two options. Option A would have an initial lower cost but would require a significant expenditure for rebuilding after 4 years. Option B would require no rebuilding expenditure, but its maintenance costs would be higher. Since the Option B machine is of initial higher quality, it is expected to have a salvage value at the end of its useful life. The following estimates were made of the cash flows. The company's cost of capital is 7%. Option A Option B Initial cost $177,000 $268,000 Annual cash inflows $72,000 $81,700 Annual cash outflows $28,500 $25,600 Cost to rebuild (end of year 4) $51,000 $0 Salvage value $0 $7,400 Estimated useful life 7 years 7 years